Virginia Electric and Power Co. was granted a $131.8 million rate increase yesterday that will add 9.8 percent -- or more than $6 a month this winter -- to a typical Northern Virginian's residential utility bill.
The State Corporation Commission granted the increase while criticizing Vepco for inefficiency. But the regulatory agency, which trimmed a total of $79 million from Vepco's initial request, promised the Richmond-based utility it would be allowed to increase its rates further if it shows a marked improvement in operations.
"The performance of some of Vepco's generating units was less than satisfactory, translating into a higher level of expenses and higher rates for customers," said the three-member commission in its unanimous decision.
The increase means that, beginning Saturday, an average residential customer -- one using 1,000 kilowatts of electricity a month -- will pay $4.56 more, boosting Vepco's typical summer bills from $64.32 to $68.88. Vepco's winter rates will rise from $57.96 to $64.24 per month per thousand kilowatts.
"The whole thing is so bad, what can you say," said Christie Vernon, head of Virginia's Consumer Congress, a citizen's organization that argued against Vepco's rate increase during 15 days of hearings earlier this year. "We had asked for a rate decrease rather than any increase."
The State Attorney General's office, which is required by law to represent citizens at utility rate hearings, asked the SCC to grant Vepco no more than a $76 million rate increase. Attorney General J.Marshall Coleman, the Republican candidate for governor, did not personally argue against the rate increase as he has during past hearings. Some Vepco critics said yesterday that their case had been hindered by Coleman's absence.
"The political reality is that Marshall Coleman doesn't want to get the establishment of Virginia mad at him while he's running for governor," said Jerri Brown, a Northern Virginia representative of the Consumer Congress. He said the increase encountered less industry opposition than usual because the utility had proposed shifting the major portion of the increase to residential customers.
"And we're not as strong as we were." Brown said."Our money has really dried up. Our presence wasn't as well felt this year."
Officials of Vepco, which has been criticized often for its frequent rate increase requests and problems with its nuclear power plants, had maintained that the company needed rate increases totaling $210.5 million because of inflation and the high cost of disposing of spent nuclear fuels. Even with three rate increases totaling $126 million last year, Vepco officials said, the typical customer's residential utility bill dropped 7 percent during the first half of the year because of decreases in the cost of fuels Vepco uses to generate power.
Vepco also had asked for $22 million for expenses related to the cancellation of its North Anna Four nuclear plant, which was scrapped last year after officials said it was no longer needed. The SCC cut that request in half, a decision that pleased no one.
"We were allowed to recover the cost of that investment, but the SCC did not allow us to earn money on what Vepco invested" in the cancelled plant, said Paul G. Edwards, a Vepco vice president.
"They shouldn't get a plugged nickel of the $22 million," said Brown, whose consumer organization predicted seven years ago that the North Anna plant was unnecessary. "Vepco should not be allowed to charge consumers for its mistakes."
Vepco had asked for an increase large enough to allow owners of its common stock to earn a 16.5 percent rate of return on their investment, an increase of 3 percent over the rate currently allowed. The SCC ordered that rate raised instead to 15 percent.
"A 15 percent ceiling on the opportunity to earn this year is not consistent with money market conditions that are common knowledge to investors and consumers alike," Vepco vice president C.M. Jarvis told a news conference yesterday.
The SCC said if Vepco "can make a satisfactory showing" in the near future, the rate will be raised another half percent. Such an increase would give Vepco another $12.5 million a year in revenues.
Shortly after Vepco filed for increases totaling $210.5 million, the SCC rejected a $19 million charge sought by the utility to dispose of spent nuclear fuel.